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Singapore Investment


 SAPNRG 5218 pn17 SAPURA ENERGY BERHAD jumps on news of key appointments but fizzles after merger denial. Should you take a bet on the oil & gas provider?

Sapura Energy Bhd’s share price rose 14.3% or 0.5 sen to 4 sen during the morning trading session on May 29 fueled by announcement of several key appointments.

The stock was the third-most active counter with around 4.13 million shares amid talks of the group’s possible merger with Malaysia Marine and Heavy Engineering Holdings Bhd (MHB), a unit of Petroliam Nasional Bhd (Petronas).

However, the counter closed unchanged at 3.5 sen on May 29.

This is possible due to the Petronas’ denial statement on the merger speculation.

The national oil firm said any investment or divestment consideration within the Petronas group has always been and will continue to be strictly guided by a board-approved and management-enforced framework.

Earlier this month, news reports said the majority shareholders of debt-laden Sapura Energy and MHB, namely Permodalan Nasional Bhd and Petronas respectively, were “mulling” merging the two oil and gas services providers.

However, the report  stressed the discussions are still preliminary..

Despite the merger news, Sapura Energy is still trading close to its 52-week low of 3 sen versus its year high of 9 sen seen in May last year.

While the excitement over the upstream outfit is understandable give the merger news, fundamentally, Sapura Energy is not out of the woods yet.

For the financial year ended Jan 31, 2023, the company narrowed its losses by half to RM3.2 billion from RM9.1 billion in the previous year.

This is on the back of flattish revenue of RM4.5 billion compared with RM4.1 billion in FY22.

On May 26, Sapura Energy announced that former MHB managing director and CEO, Wan Mashitah Wan Abdullah Sani, had joined the board as an independent and non-executive director.

On the same day, it announced in a separate filing in Bursa Malaysia that Datuk Nur Iskandar A Samad has also come aboard as Sapura Energy’s other new independent and non-executive director.

He has held many senior leadership positions in Petronas.

Sapura Energy said Wan Mashitah, 56, has over 28 years' experience encompassing finance, strategic planning, project costing and supply chain management with her last position at MHB.

The group also highlighted that Wan Mashitah was the CEO of E&P Operations and Maintenance Services Sdn Bhd from March 31, 2022 to Sept 30, 2022.

She helped to transition the company from a wholly-owned subsidiary of Petronas to a privately-owned company.

Meanwhile, it said Nur Iskandar, 65, carries 41 years of experience in the downstream oil, gas and petrochemical industry.

Sapura Energy said Nur Iskandar had been on the board of directors of several Petronas's subsidiaries previously.

Based on the latest appointments, it does look like the pieces are being put in place to bring the merger move closer to fruition.

Should this merger take place in the near term, this spell good news for Sapura Energy shareholders as they might be able to exit at a higher price.



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